Updated from June 12

Analysts handicapping Oracle's ( ORCL) fourth quarter were mostly upbeat, with at least two upgrading the shares after the software marker beat its own earnings estimates.

The news continued to be crowded out by the increasingly ugly fight to take over rival software maker PeopleSoft ( PSFT).

Prudential Securities and Banc of America both upgraded the shares to buy after Oracle posted earnings of $885 million, or 16 cents a share, up 31% from a year ago and beating estimates by 2 cents. Total revenue for the May quarter was $2.83 billion, up from $2.77 billion a year ago and above the $2.75 billion consensus.

New software license revenue rose 1% to $1.2 billion; software license updates and product support increased 12% to $1.1 billion, but services declined 11% to $580 million. Operating margin in the quarter was a record 45%, eclipsing the previous record of 44% in the fourth quarter of 2002, the company said.

Prudential raised its price target to $17 based on "increased confidence in its ability to deliver above-market operating results," adding that "the sales force reorganization separating the applications business from the technology business (i.e., database and application server) is beginning to reap benefits."

Oracle was recently up 47 cents, or 3.5%, to $13.80 on the Instinet premarket session.

Banc of America said it thought Oracle's business fundamentals were turning around and that it faces a beneficial upgrade cycle. Two other brokerages were less sanguine: Both Deutsche and UBS initiated coverage on the software company with neutral ratings Friday.

As Oracle CEO Larry Ellison was announcing his company's stronger-than-expected results, J.D. Edwards ( JDEC) announced that it was suing Oracle for allegedly disrupting its planned merger with PeopleSoft. Oracle dismissed the suit as "having no merit whatsoever."

And Ellison implied that he won't raise his current $16-a-share offer. "Our all-cash offer is a much safer way for PeopleSoft shareholders to go," he said during a conference with analysts.

Looking to the current quarter, Oracle expects earnings of 7 cents to 8 cents -- Wall Street is expecting 8 cents -- with revenue growing by 4% to 7%. New license revenue is expected to grow by 2% to 12%, the company said.

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